Michael Saylor, the founder of the American software company MicroStrategy, was sued by the Attorney General of the District of Columbia (Washington, DC) in August 2022, claiming that he had lived in the district for more than 10 years but had never paid any income tax, and MicroStrategy He was also charged with conspiring to facilitate tax evasion. Michael Saylor and MicroStrategy have agreed to pay $40 million to settle the tax fraud lawsuit, according to CNBC.

Changing Domicile to Escape Washington, D.C. Income Tax

According to previous reports, U.S. Attorney Karl A. Racine of Washington sued the billionaire technology company CEO in August 2022, claiming that he had lived in the district for more than ten years but had never paid Washington income tax, so he sued He committed tax fraud. At the same time, MicroStrategy was also sued for conspiring to assist him in tax evasion. The report said the tax amount exceeds $25 million, and if finalized, it will be required to pay back taxes, treble damages, civil penalties and other expenses.

Saylor reportedly lives in a penthouse in Washington overlooking the Georgetown waterfront, while his yacht is moored on the Potomac River. But he pretended to be a resident of Florida or Virginia (where MicroStrategy is headquartered), bought property and registered to vote in those states. However, he resides in Washington, D.C., for more than 183 days per year, which is a basic requirement for becoming a "statutory resident."

In addition to paying federal taxes, U.S. citizens who are residents as defined by state laws and individuals who have income from state sources must report state income tax in the state where the resident income is sourced. The United States is a vast country, and tax rates vary greatly among states. According to the latest data released by the U.S. Tax Foundation, the tax rate in Washington, D.C., is as high as 10.75%, while Florida imposes no tax. It’s no wonder that Saylor’s boss wants to avoid the high income tax rate by changing his residential address.

Saylor agrees to settle to avoid litigation burden

According to the attorney general's complaint, the microstrategy helped Saylor conceal his Washington, D.C., residency so that he would not pay higher income taxes. And MicroStrategy also failed to pay the corporate taxes required of a company employing Washington residents.

Attorney General Schwalb said in a statement:

Saylor publicly bragged about his tax evasion scheme, encouraged his friends to follow his example, and claimed that anyone who paid taxes to the District was stupid.

Saylor denied the attorney general's allegations, saying in a statement to CNBC:

Florida remains my home, and I continue to dispute the allegation that I was once a resident of the District of Columbia. I agree to settle this matter to avoid the ongoing burden of litigation on friends, family, and myself.

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